The study, through two-stage stakeholder consultation, identified potential challenges and limitations in understanding of the Chinese carbon markets. We would like to make the following policy recommendations.-There was too much attention by government and key stakeholders on price and volume of carbon allowance in the China’s pilot ETS schemes; stakeholders and policymakers should continuously assess the quality of regulation, market integrity and information disclosure.1.As carbon market is not likely being the only major low-carbon policy instrument in China, a correct interpretation of carbon pricing signal is needed as a part of capacity development within industry participants.2.Alternative carbon pricing signal, such as government’s shadow carbon price should be proposed along with carbon market allowance price to signal industry the short-term and long-term cost of carbon emissions.3.Regulators and carbon exchanges should provide in-time and transparent information for market participants for price discovery.4.The Chinese government should heavily invest in MRV system, and establish a mandated professional and standard practice, calibrating existing data, to provide confidence for market participants.5.Moving towards a national carbon market, governments should encourage studying international linkage and improving the compatibility of carbon market pilots, though actual policies for international linkages need more considerations, including the alignment with climate policies.
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